Embraer is at the show in an optimistic mood, hailing a better-than-expected recovery in market demand for its commercial aircraft.
However, Luiz Chiessi, the Brazilian manufacturer's vice-president market intelligence for the airline market, cautions that the revenue outlook for carriers remains "weak, but with signs of improvement", with "limited aircraft financing resources still prevailing".
"We don't expect a large turnaround in the aircraft financing," he adds.
Also looming on the horizon is the competitive threat posed by several new large regional jets being developed by rival manufacturers, including the Comac ARJ21 in China, the Mitsubishi MRJ in Japan and Sukhoi Superjet in Russia.
"We are concerned because out of all those new programmes, those companies are supported by their governments," says Chiessi.
"They are getting strong support from their governments," he adds. "It's something that worries us, because it distorts competition."
Chiessi questions the sustainability of the "price aggressiveness" shown by Mitsubishi in its recent deal with Trans States Airlines, for which he claims Embraer was not invited to bid.
Regional jet drivers in Europe
Embraer forecast 2010-29: main drivers for regional jet demand in Europe
- Environmental rules may affect growth.
- Increased competition from low-cost carriers.
- High-speed rail development.
- Airline consolidation.
- “Right-sizing” and direct replacement opportunities.
Embraer's firm orderbook for its E-Jets family stands at 861, of which 625 have been delivered since the first aircraft was handed over in 2004. Production peaked in 2008 when nearly 160 E-Jets were delivered, but the industry downturn saw this fall to below 120 in 2009 and only 90 are expected to be handed over this year.
"We believe that deliveries are really going to recover in 2011 and 2012, and we'll get back to 140-160 deliveries in 2012," says Chiessi.
Embraer's latest market forecast for 2010-29 predicts demand for just under 6,900 regional jets seating 30-120 passengers, worth $225 billion. Of these, 50% will be used for "right-sizing" mainline narrowbody routes now flown with aircraft such as the Airbus A320 or Boeing 737, while 20% will be accounted for by new markets, 9% for replacing older regional jets and 21% for "natural" growth of existing operations, says Chiessi.
Europe accounts for 23% of the predicted demand for regional jets, representing just over 1,500 aircraft. However, Chiessi acknowledges that airport congestion could have a major impact on the growth of the continent's regional aviation market.
"We have this clear in our long-term planning," says Chiessi. "We expect that with increasing demand, this hub congestion is going to get worse.
"Airlines will keep using bigger aircraft but, on the other hand, secondary airports will start playing a much more important role than today. You will have a fragmentation of traffic."
Another uncertainty is whether Europe's large low-cost carriers will follow the JetBlue model in the USA and adopt a second, smaller aircraft type, such as the E-190, to develop new routes.
"Of course, we are not dreamers," says Chiessi. "Ryanair is difficult for the time being. But we do believe that two-tier fleets in the low-cost carriers will be more common in the future. They are expanding quickly until there are no more high-density markets to keep growing."
The market for the 50-seat ERJ-145 and its smaller ERJ-140 and ERJ-135 siblings has all but evaporated, with just seven ERJ-145s remaining on firm backlog, to be produced by the Harbin Embraer joint venture in China.
This production line is likely to close by mid-2011, but Embraer is seeking Chinese government approval to produce the larger E-190 at the site instead.
"We still don't have the decision of the Chinese government, but we are confident that this will be a positive decision," says Chiessi.
"We need at least one-and-a-half years to change the production line from one type to the other.
"The market for 50-seat jets is not strong, and we don't expect it to get stronger in the future."
Embraer's market forecast identifies an eventual opportunity to replace the current fleet of 50-seaters in the 2020-29 timeframe.
"We foresee an opportunity for maybe a new jet in that seat capacity, but further down the road," says Chiessi.